Opinion
Case No. C-2-96-793
March 8, 2001
OPINION AND ORDER
Plaintiff asserts that defendant wrongfully denied him permanent disability benefits in violation of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq. The Court previously granted summary judgment for defendant. Following remand from the Sixth Circuit Court of Appeals and an order that defendant engage in additional factfinding to supplement the administrative record, the parties again filed cross-motions for summary judgment. For the reasons that follow, the Court denies the parties' summary judgment motions.
I. FACTS
Plaintiff, Gerald K. Donnelly, began working for American Nickeloid Company ("American Nickeloid") in 1962. Defendant, Guarantee Mutual Life Company provides group insurance coverage for American Nickeloid, including partial and permanent disability insurance for American Nickeloid's employees.
In August 1990, plaintiff began noticing symptoms of what was later diagnosed as Progressive Multiple Sclerosis. On April 11, 1995, plaintiff was examined by Dr. Jerry R. Mendell. Dr. Mendell found that plaintiff was totally disabled, and that his functional capacity showed "marked limitation" (Doc. 32, Exh. 7). Dr. Mendell found, however, that plaintiff was ambulatory, able to function under stress and engage in interpersonal relations, and capable of administrative, or sedentary work (Doc. 32, Exh. 7).
Based on this evaluation, plaintiff filed an application with defendant for permanent disability benefits on April 28, 1995 (Doc. 32, Exh. 6). On May 22, 1995, plaintiff was evaluated by Dr. Kottil W. Rammohan, Associate Professor of Neurology and Director of the Multiple Sclerosis Center at The Ohio State University. Dr. Rammohan wrote that his findings were consistent with Progressive Multiple Sclerosis (Doc. 32, Exh. 8). Dr. Rammohan found that plaintiff was "ambulatory without aids" (Doc. 32, Exh. 8) and "capable of sedentary employment" (Doc. 32, Exh. 9).
On May 31, 1995, plaintiff elected to voluntarily terminate his employment with American Nickeloid with the expectation that he would receive disability benefits from defendant. On September 11, 1995, defendant denied plaintiff's application for total disability benefits (Doc. 32, Exh. 10). Defendant, in its denial letter to plaintiff, wrote that "the medical information we have in our file does not indicate any specific restrictions and limitations which would prevent you from performing each of the main duties of your own occupation" (Doc. 32, Exh. 10, p. 1). Defendant based its denial on Dr. Rammohan's finding that plaintiff was capable of performing the sedentary duties of his occupation, and therefore, was not totally disabled under the policy.
Plaintiff sought an administrative appeal. Defendant examined additional medical statements and had plaintiff's file independently reviewed by the Medical Review Institute ("MRI"). The file was also reviewed by the Illinois Department of Insurance based on a request from American Nickeloid. Both MRI and the Illinois Department of Insurance indicated that plaintiff was disabled from full-time employment, but remained able to engage in part-time employment. On May 8, 1996, defendant denied plaintiff's administrative appeal.
On August 9, 1996, plaintiff initiated this action pursuant to 29 U.S.C. § 1132(a)(1)(B) to recover benefits allegedly due him under the term of his plan (Doc. 1). On March 3, 1998, this Court granted defendant's summary judgment motion based upon the record before it at that time that indicated that the main duties of plaintiff's occupation included both sedentary and non-sedentary functions.
Upon plaintiff's appeal of this Court's Opinion and Order, the Sixth Circuit Court of Appeals reversed and remanded the case. The appellate court found that this Court's determination that plaintiff's job encompassed both sedentary and non-sedentary duties was not conclusive of his claim because defendant had not determined whether plaintiff's sedentary duties were main, rather than ancillary, duties of plaintiff's occupation pursuant to the plan language.
Upon remand, this Court ordered defendant to engage in additional factfinding, including making a specific finding as to the main duties of plaintiff's regular occupation and his ability to perform these main duties as of his termination on May 31, 1995, and to issue a final administrative decision on plaintiff's claim for disability benefits on or before December 6, 1999 (Doc. 23). On December 6, 1999, defendant again denied plaintiff's total disability claim. Defendant filed the record of its administrative review with the Court on February 10, 2000 (Doc. 30). The parties now renew their respective motions for summary judgment.
II. SUMMARY JUDGMENT STANDARD
The procedure for granting summary judgment is found in Fed.R.Civ.P. 56(c), which provides:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
The evidence must be viewed in the light most favorable to the nonmoving party. See Adickes v. Kress Co., 398 U.S. 144, 158-59 (1970). Summary judgment will not lie if the dispute about a material fact is genuine; "that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment is appropriate, however, if the opposing party fails to make a showing sufficient to establish the existence of an element essential to that party's case and on which that party will bear the burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Matsushita Electric Industrial Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574 (1986).
The Sixth Circuit Court of Appeals has recognized that Liberty Lobby, Celotex and Matsushita have effected "a decided change in summary judgment practice," ushering in a "new era" in summary judgments. Street v. J.C. Bradford Co., 886 F.2d 1472, 1476 (6th Cir. 1989). The court in Street identified a number of important principles applicable in summary judgment practice. For example, complex cases and cases involving state of mind issues are not necessarily inappropriate for summary judgment.Id. at 1479. In addition, in responding to a summary judgment motion, the nonmoving party "cannot rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact, but must 'present affirmative evidence in order to defeat a properly supported motion for summary judgment.'" Id. (quoting Liberty Lobby, 477 U.S. at 257). The nonmoving party must adduce more than a scintilla of evidence to overcome the summary judgment motion. Id. It is not sufficient for the nonmoving party to merely "show that there is some metaphysical doubt as to the material facts." Id. (quoting Matsushita, 475 U.S. at 586).
Moreover, "[t]he trial court no longer has a duty to search the entire record to establish that it is bereft of a genuine issue of material fact." Id. That is, the nonmoving party has an affirmative duty to direct the court's attention to those specific portions of the record upon which it seeks to rely to create a genuine issue of material fact.
III. DISCUSSION
The first issue for resolution is the standard of review that is given the administrator's decision to deny plaintiff benefits. Plaintiff argues that the Court should evaluate the decision de novo, while the defendant contends that its decision is subject to an arbitrary and capricious standard. In determining the appropriate standard of review to afford a plan administrator's plan determination, the Supreme Court, applying trust law principles, found that "denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary authority to determine eligibility for benefits or to construe the terms of the plan." See Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Because a trustee's decision is accorded deference only when the trust instrument grants the trustee discretion, the Court concluded that deference to a plan administrator's decisions would be appropriate only when the plan granted discretion to the administrator. Id.
The Sixth Circuit has interpreted Bruch as requiring the plan's grant of discretionary authority be "express." Perry v. Simplicity Eng'g, 900 F.2d 963, 965 (6th Cir. 1990); see also Brown v. Ampco-Pittsburgh Corp., 876 F.2d 546, 550 (6th Cir. 1989) (requiring the grant of authority be "clear"). As a result of these decisions, the Court must examine the plan language to determine whether defendant was given discretion.
The plan language to which defendant points to demonstrate discretionary authority states:
NOTICE OF CLAIM. Written notice of claim must be given during the Elimination Period. . . . PROOF OF CLAIM. The Company must be given written proof of claim within 90 days after the end of the elimination period. . . . Proof of Claim must show . . . The Company will pay a Total Disability Monthly Benefit . . . if such Insured Employee . . . submits proof of continued Total Disability.
(Doc. 32, Exh. 1, pp. 6, 9). Defendant contends that this plan language is in line with Perez and its progeny which liberally interpret plan language to find discretionary authority. Defendant cites several cases to support its argument. See Perez v. Aetna Life Ins. Co., 150 F.3d 550, 555 (6th Cir. 1998) (Perez II) (en banc); Brown v. National City Corp., 166 F.3d 1213, 1998 WL 787084 (6th Cir. 1998); McSwain v. UNUM Life Ins. Co. of America, No. 96-CV-75370-DT (E.D. Mich., Sept. 29, 1998);Vantreese v. Jackson Madison Cty. General Hospital Dist., No. 97-1241 (W.D. Tenn., Mar. 24, 1999).
In Perez, the court held that the language "shall have the right to require as part of the proof of claim satisfactory evidence" vested the plan administrator with discretion. 150 F.3d at 555. Although the Sixth Circuit stated that there were no "magic words" required to show discretion, it did base its decision in Perez on the existence of language that required "satisfactory evidence":
This 'right to require as part of proof of claim satisfactory evidence' means, semantically, that the evidence must be satisfactory to Aetna, the only named part with the right to request such evidence. It naturally follows that Aetna, the receiver of the evidence, would review that evidence to determine if it constitutes proof of total disability.Id. at 556-57. In Brown, the Sixth Circuit looked to the plan language that allowed the administrator to "interpret the terms and conditions of the Plan," and, further, that unless the plan administrator 'allows such claim in full,' the administrator "shall give notice to the claimant of the denial of the claim." 166 F.3d 1213, *2. The court determined that the word "allows" indicated that the plan administrator was given discretion.
In McSwain, the trial judge granted summary judgment through a misplaced reading of Perez. The Sixth Circuit in Perez was called on to determine whether the use of the words "satisfactory evidence" meant that the evidence had to be satisfactory to the plan administrator in the absence of a construction of the language that demonstrated that this was necessarily the case. The Perez court, comparing its case to Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376, 380-81 and Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 983 (6th Cir. 1991), wrote:
The district court in Yeager had found this contractual language ambiguous because it was unclear whether the phrase 'to us' modified 'submits' or 'satisfactory proof of Total Disability.' The district court held that this absence of explicit contractual language meant that the plan administrator had not clearly been granted discretion under the plan. In reversing the district court's decision, we stated: . . . [t]he critical requirement in Miller is that the evidence of disability be satisfactory.
150 F.3d at 557-58. Clearly, the Perez court never held that evidence satisfactory to the plan administrator wasn't required. Rather, it held that a plain and ordinary reading will be given the plan when determining to whom the submitted proof or evidence must be satisfactory. Id., at 558.
In Vantreese, the trial judge was confronted with plan language that stated:
We will pay you a monthly benefit after the end of the elimination period when we receive proof that you: (1) are disabled due to sickness or injury; and (2) require the attendance of a physician. . . . The insurance company will make a full and fair review of the claim and may require additional documents as it deems necessary or desirable in making such a review.
At p. 4. This Court would concur with the decision of the trial court inVantreese that the words "full and fair review" indicate that the plan administrator had discretion to make a plan determination.
The language of the plans in the cases cited by defendant are distinguishable from the language of the plan at issue in this case. In determining whether the language of the policy in this case grants discretion, the Court must find an express grant of discretion. See Perry, 900 F.2d at 965. The determination of whether certain language conveys discretion turns on whether the plan, as written, allows for a plan administrator to use its subjective judgment. See Perez, 150 F.3d at 558. In the cases cited by defendant, each court identified language that allowed the plan administrator to use its subjective judgment. The language of the Guarantee policy is different from the language of these policies. Under the Guarantee policy, defendant must be given "written proof of claim." Although defendant must be provided with written proof of claim, the policy does not expressly bestow defendant with any subjective judgment as to whether this written proof of claim is sufficient. Unlike the plans in Perez and Yeager, there was no requirement under this plan that the proof of claim had to be satisfactory to defendant, though use of the term "satisfactory" was not required. The fact that defendant must be provided with written proof of claim does not explicitly grant it discretionary authority sufficient to use an arbitrary and capricious standard. See Chiera v. John Hancock Mut. Life Ins. Co., 2001 WL 111585, *5 (6th Cir. Feb. 4, 2001) (unpublished opinion). As a result, the Court will review defendant's denial of benefits using a de novo standard of review.
The thrust of the pates' disagreement is over the construction of the term "occupation" as it is used in the plan at issue. Total disability or totally disabled is defined in the insurance plan as:
[a]n Insured Employee, [who] due to an Injury or Sickness, is unable:
1. during the Elimination Period [90 days] and the Own Occupation Period [60 months], to perform each of the main duties of the Insured Employee's regular occupation; and
2. after the Own Occupation Period, to perform each of the main duties of any gainful occupation for which the Insured Employee's training, education or experience will reasonably allow.
Doc. 31, Exh. D, GL 0021). Plaintiff argues that the plan term "occupation" should be construed to mean his own duties with American Nickeloid. Defendant contends that the term connotes a class or group of duties performed by one with a given title, as distinguished from the term "job," which defendant states refers to the duties attendant one's own specific work situation. Defendant sets forth that plaintiff's ability to perform his specific duties for American Nickeloid is immaterial because the appropriate inquiry is whether plaintiff is able to perform each of the main duties of a District Sales Manager as those duties would be "performed generally in a typical setting" (Doc. 32, Exh. 5, GL461).
The Court applies federal common law rules of contract interpretation in analyzing an ERISA plan. See Perez, 150 F.3d at 556. In developing federal common law rules of contract interpretation, this Court is to take direction from both state law and general contract principles. See Regents of the Univ. of Michigan v. Agency Rent-a-Car, 122 F.3d 336, 339 (6th Cir. 1997). Contract law requires that the plan's provisions be interpreted according to their plain meaning, in an ordinary and popular sense, as by a person of average intelligence and experience. See Id.;see also McClure v. Life Ins. Co. of North America, 84 F.3d 1129, 1134 (6th Cir. 1996) (citing Evans v. Safeco Life Ins. Co., 916 F.2d 1437, 1439 (9th Cir. 1990)). Defendant failed to define the term "occupation" in its plan. As a result the Court is left to interpret this policy term in accordance with these principles.
"Occupation" is defined as "an activity that serves as one's regular source of livelihood." THE AMERICAN HERITAGE DICTIONARY 908 (10th ed. 1981). "Job" is defined as "an activity performed in exchange for payment; especially, one performed regularly as one's trade, occupation, or profession." Id. at 705. Although defendant's argued distinction between the terms is colorable, albeit hair-splitting, the Court fails to see the distinction as clear-cut as defendant, at least in an ordinary and popular sense to the reasonable person.
The Court also points out that defendant has used. the terms "job" and "occupation" interchangeably in the past. Defendant provided a preprinted form titled "Attending Physician's Statement" to Dr. Mendell for him to complete based upon his evaluation of plaintiff (Dec. 32, Exh. 7). This form was purportedly used by defendant in its decision on the status of plaintiff's disability claim. In choosing specific language for Dr. Mendell to use, defendant repeatedly uses the term "job":
"is patient now totally disabled? Patient's Job; when do you expect a fundamental or marked change in the future? Patient's Job; is plaintiff a suitable candidate for occupational rehabilitation? Patient's Job [emphasis added].
(Doc. 32, Exh. 7). Defendant also refers to this form and, otherwise, uses the words "job" and "main duties of his job" rather than "occupation" in its original motion for summary judgment (Doc. 9, pp. 11, 12) and its later reply memorandum (Doc. 11, p. 7). In addition, defendant sought plaintiff's specific "job description" from American Nickeloid in its original investigation (Dec. 32, Exh. 2). In its later denial letter of December 6, 1999. defendant sets forth:
[i]n order to evaluate your eligibility for benefits, we have undertaken an investigation in addition [to] the review done of your original application. This investigation included requesting both you and your former employer to provide us with any pertinent information you might have. We have obtained American Nickeloid's written job description of your position, [and] your personal job description for your job duties.
(Doc. 32, Exh. 5, GL461). Defendant apparently relied on this job description in denying plaintiff s claim again. Evidence provided by plaintiff and American Nickeloid of plaintiff's job description used to evaluate plaintiff's claim contradicts defendant's present position that plaintiff's specific job duties were irrelevant. At deposition, defendant's counsel inquired of Dr. Rammohan:
Q: Okay. Let me direct your attention, sir, to page 3C. This is a job description of Mr. Donnelly's position at American Nickeloid which was completed by his employer. In reviewing their description of his job duties, as a district sales manager for Ohio, West Virginia, part of New York, Pennsylvania, and Kentucky, can Jerry Donnelly perform this job? [emphasis added].
(Rammohan Depo., pp. 29-30). In fact, no where in its previous filings has defendant raised the distinction of these terms and sought to use them to explain the denial of benefits. Defendant has raised this new point only since remand.
The Court is also guided by the opinion of the Sixth Circuit in this case. The court wrote that, "[a]lthough the available information gives us some idea of what was required of plaintiff at American Nickeloid, the picture remains incomplete" [emphasis added] (Doc. 19, p. 4). The Sixth Circuit also points out in its footnote that the pertinent issue is not whether plaintiff could have been reassigned to perform different duties in his partially-disabled state, but rather whether plaintiff was "unable to complete the tasks inherent in his own job" [emphasis added] (Doc. 19, p. 4, fn. 1). It appears, therefore, that the Sixth Circuit believes that the correct construction of the term occupation is plaintiff's own duties at American Nickeloid.
In an earlier opinion, the Sixth Circuit appears to use the terms "occupation" and "job" interchangeably as well. See Wilkins v. Baptist Healthcare System, Inc., 150 F.3d 609, 614 (6th Cir. 1998). In its opinion, it wrote: "'[a]n employee will be considered Disabled if because of injury or sickness, he is able to perform all the material duties of his regular occupation. . . .' Essentially the Plan required Wilkins to show that he was no longer able to perform the duties of his job because of his injury or illness." Id.
The Court also notes that the language of the plan itself supports this conclusion. The Court must construe the plan as a whole and do its best to give effect to all of its provisions. See United States Fidelity Guaranty Co. v. Insurance Co. of North America, 149 F.3d 1184, 1998 WL 321054, *2 (6th Cir. 1998) (unpublished opinion); Portaro v. American Guarantee Liab. Ins. Co., 310 F.2d 897, 899 (6th Cir. 1962). The plan language reads:
Total disability or totally disabled is defined in the insurance plan as:
[a]n Insured Employee, [who] due to an Injury or Sickness, is unable:
1. during the Elimination Period [90 days] and the Own Occupation Period [60 months], to perform each of the main duties of the Insured Employee's regular occupation; and
2. after the Own Occupation Period, to perform each of the main duties of any gainful occupation for which the Insured Employee's training, education or experience will reasonably allow.
The second numbered paragraph states that an employee is totally disabled under the plan if, after the own occupation period, he is unable to perform each of the main duties of any gainful occupation for which the employee's training, education or experience will reasonably allow, this paragraph appears to define the term "occupation" as it relates to a category or group of jobs in stating that if plaintiff is unable to perform any work for which his training, education, or experience qualify him, he is totally disabled under the plan. Yet, if defendant's construction of the term is adopted, this would cause the second paragraph to become surplusage and superfluous language.
As such, the Court finds that the term "occupation" as it is used in the subject plan is ambiguous at best. The oft-used canon of contract construction, contra proferentum, provides that ambiguous contract provisions in ERISA-governed insurance contracts should be construed against the insurer. See Perez, 150 F.3d at 557, n. 7 (citing Schradrer v. Blue Cross Blue Shield, 77 F.3d 889, 895 n. 6 (6th Cir. 1996)). This is in keeping with Congressional intent in passing ERISA:
Congress passed ERISA in order to assure that those who participate in employee benefit plans actually receive the benefits they are entitled to and 'do not lose their benefits as a result of unduly restrictive . . . provisions.Vanderklok v. Provident Life Accident Ins. Co., 956 F.2d 610, 614 (6th Cir. 1992) (citing H.R. Rep. No. 93-807, 93rd Cong., 2d Sess. 3, reprinted in 1974 U.S. Code Cong. Admin. News 4639. 4670, 4676-77).
The Court finds that genuine issues of material fact exist that are appropriate for resolution by the trier of fact. Specifically, the issue at trial should be whether the sedentary duties of plaintiff's occupation, if any, were main or ancillary duties, and whether, if they were main duties, he was able to perform them as of May 31, 1995. Plaintiff's second claim for breach of fiduciary duty hereby remains part of this action.
V. CONCLUSION
Based on the foregoing, plaintiff's and defendant's motions for summary judgment are hereby DENIED. The Court also grants plaintiff's motion to strike defendant's supplemental authority.
The Court finds that the plaintiff is correct in its statement of S.D. Ohio Rule 7.2. Defendant must file motion for leave to file supplemental authority once it has already submitted its filings for consideration. The Court, however, notes that defendant's action is harmless error as the Court would cite and rely upon the cases presented in the supplemental filing if their discussion would be helpful to the case.
The Clerk shall remove documents 31, 32, and 36 from the Court's pending motions list.